AusGroup to sell Tuas facility to Boustead and lease it back

AusGroup, which provides fabrication and construction services to the oil and gas and resources industries, has sold its Singapore fabrication facilities to Boustead and will lease it back for its own use.

The industrial property is located at 36 Tuas Road and has an area of about 29,893 sq m. It was sold for A$33 million (S$39 million), allowing AusGroup to book a profit of A$14.5 million, the company said in a statement on Thursday.

AusGroup will recognise some of the gains immediately with the rest being booked over the period of the lease.

"With the purchase price for the property of A$33 million being significantly higher than its net book value, the Board consider the proposed sale a good value opportunity," AusGroup said.

It intends to use the net sale proceeds to repay some bank borrowings, facilitate other corporate funding requirements, and for general working capital requirements.

The sale is expected to be completed in September 2013. Once it is completed, AusGroup will lease back the facility from Boustead until May 14, 2025, Boustead said in a separate statement.

Boustead also said the open market valuation of the property is $44.6 million based on a valuation done last month by Colliers International.

Boustead will fund the acquisition through internal resources, external investors and bank borrowings.